prepared the following income statement for its operations for the month just ended:
Sales commissions were of sales. Income taxes were of income before income taxes. Both
should continue at the same rate for the remainder of the year.
Fairfield Stores is preparing the budget for the month of May. If no basic changes are made,
Fairfield's management expects that the income statement would be virtually identical to the one for
April. However, Fairfield's management has decided to make some changes in the operations. The
plans include the following:
Increase advertising expense by
Decrease all selling prices by
Increase the number of units sold by as a result of the first two changes.
a Prepare a budgeted income statement for the month of May. Round all amounts on the income
statement to the nearest dollar.
b Should Fairfield's management make the planned changes?
Prepare a Budgeted Income Statement in good form.
Check figure: Income before taxes, $
Prepare a Budgeted Income Statement in good form.
Check figure: Income before taxes, $
